Stay relaxed and protect yourself against the tax risk with tax insurance!
What is it all about?
Working from wherever you want: Since the changeover to working from home due to the pandemic, flexible working from your own home office (remote working) or even sunny holiday homes (workation) has become part of the new work-life style. After all, it’s cool when you can go for a swim in the pool or take a nap under the palm trees on the beach straight after a conference call during your lunch break, while your colleagues in Germany can hear the raindrops pattering on the window. And of course, this privilege is also documented with a little selfie as a post on LinkedIn.
The topic is increasingly on the radar of the tax authorities. The topic is increasingly on the radar of the tax authorities. Working from home or from abroad can, under certain circumstances, have a significant impact on the taxation of the company and unplanned relocation of the place of management of a company or the establishment of a so-called permanent establishment: Although the latter should as a rule not be the case for an employee in the home office, but as soon as the employee performs management functions, e.g. signs relevant contracts, the situation can be completely different. It does not matter whether the employee performs the management functions in their own home or in rented rooms or hotels. According to the tax authorities, the question of where management functions are carried out should depend on “the actual circumstances of the individual case”.
Interpretation of laws depends on circumstances of the individual case
If the company has no guidelines or specifications for remote working and cannot provide sufficiently clear documentation for absences, discussions are likely to be inevitable in the next tax audit: Apart from the question of which municipality in Germany or, if applicable, which foreign state has the right of taxation, questions regarding the allocation of income or the shifting of risks and chances need to be clarified – with associated additional taxes or penalties due to tax returns not being submitted or not being submitted correctly.
To whom does it apply?
Companies in all sectors that offer home office, remote working or workation.
How can tax insurance help?
Actual risks (factual risks), such as a lack of evidence, cannot be insured; however, the risks associated with the specific facts resulting from the interpretation of the new opinion published by the tax authorities (BMF of 5 February 2024, IV D 1 – S 0062/23/10003:001) can be insured. In practice, there are likely to be various uncertainties regarding the type of activities carried out by employees outside company premises, e.g. whether and how mixed activities of senior employees should be assessed or the assumption of repesentation or the possibility of the employer using premises.
Do you still have questions?
Feel free to contact our tax experts at any time or request a free consultation via our website.
